Which Bond ETFs Pay the Highest Yields?

Global X Treasury Bond Enhanced Income ETF

TLTX

+0.6%

The first option is the Global X Treasury Bond Enhanced Income ETF

, which launched in July 2025 and combines two distinct strategies: long-duration U.S. Treasury exposure and covered call writing.

The foundation of the portfolio consists of long-term U.S. government bonds. That can include conventional Treasury securities as well as Treasury STRIPS, short for Separate Trading of Registered Interest and Principal of Securities. STRIPS separate a Treasury bond's individual coupon and principal payments into zero-coupon securities that trade independently. Because they don't make periodic coupon payments and tend to have very long durations, their prices can be particularly sensitive to changes in interest rates.

TLTX can obtain this Treasury exposure either directly or through a fund-of-funds structure. Currently, most of the portfolio is allocated to the Global X Long-Term Treasury Ladder ETF

, which provides the underlying long-duration bond exposure.

Global X then adds an options overlay, selling calls against a portion of the portfolio. Importantly, TLTX doesn't overwrite the entire position. By leaving some of its Treasury exposure uncovered, the fund attempts to preserve a degree of capital appreciation potential if long-term bond prices rally while still collecting additional option premiums.

This is where understanding the fund's yield statistics becomes important. TLTX currently reports a 30-day SEC yield of approximately 4.88%. At first glance, that might look surprisingly low for an ETF marketed around enhanced income. However, the SEC yield primarily reflects the income generated by the underlying securities after expenses. It does not capture the full amount of cash flow generated through the fund's options strategy.

For that, the more relevant figure is the distribution rate. Global X calculates this by taking the fund's most recent monthly distribution, annualizing it, and dividing that amount by the ETF's net asset value. As of August 10, that figure stood at approximately 13.03%.

That's a substantial difference, but investors should understand what they're looking at.  The 13.03% distribution rate is based on the latest payout and is not the same as a guaranteed forward yield. Future distributions can fluctuate alongside Treasury yields, option premiums, volatility, and portfolio performance.

For an actively managed options-writing bond ETF, TLTX is also fairly affordable. Its 0.29% expense ratio compares favorably with many derivative income strategies. My bigger concern is liquidity and fund longevity. TLTX currently has a relatively wide 30-day median bid-ask spread of approximately 0.23%, which adds an implicit cost whenever investors buy or sell shares.

The fund has also struggled to gather assets. Despite having been on the market for more than a year, TLTX currently manages only about $14.6 million. That doesn't necessarily say anything about the quality of the strategy, but smaller ETFs can face greater closure risk if they fail to attract sufficient assets.

BondBloxx CCC-Rated USD High Yield Corporate Bond ETF

XCCC

-0.62%

The second approach to maximizing bond ETF yield is much more traditional: move significantly down the credit quality spectrum. Non-investment-grade generally refers to bonds rated below BBB-/Baa3, but that label encompasses a wide range of credit risks.

BB-rated bonds occupy the highest-quality portion of the high-yield market, followed by B-rated debt and then CCC-rated securities. Below that are increasingly distressed categories such as CC and C, with default sitting at the end of the spectrum. As you move down these ratings, the probability of an issuer failing to meet its obligations rises, and investors demand progressively higher yields as compensation.

The differences can be substantial. According to historical data from S&P Global, BBB-rated debt has experienced a three-year cumulative default rate of just 0.91%. Drop one level into the first tier of non-investment-grade debt and that figure rises to 4.17%. Move another step lower and it nearly triples to 12.41%. At the CCC level, the historical three-year cumulative default rate jumps to 45.67%.

That last category is precisely where the BondBloxx CCC-Rated USD High Yield Corporate Bond ETF

invests. The ETF’s index targets U.S. dollar-denominated corporate bonds with at least $300 million outstanding that fall within the CCC credit quality range. Ratings are determined using information from Moody's, S&P Global, and Fitch, while individual issuer exposure is capped at 2% to prevent any single troubled borrower from dominating the portfolio.

Sector exposures provide some indication of where this credit risk currently resides. Communication companies represent roughly 20% of the portfolio, followed by consumer cyclical companies at approximately 18.8%. Taking this much credit risk comes with compensation. After accounting for XCCC's 0.40% expense ratio, the fund currently sports a 30-day SEC yield of approximately 11.94%.

Unlike the distribution rate discussed with TLTX, this is actual bond yield rather than an annualization of a recent options-supported payout. But investors should pay close attention to the source of that yield. XCCC isn't paying nearly 12% because the underlying bonds are unusually generous. Investors are being compensated for lending money to companies with some of the weakest balance sheets.

That risk can remain dormant for extended periods. When economic growth is solid, refinancing markets remain open, and credit spreads are contained, CCC-rated bonds can generate attractive income and total returns. With credit markets remaining resilient recently, XCCC has compounded at approximately 9.93% annually over the trailing three years.

The experience can change rapidly during a credit crisis. Defaults tend to rise during recessions, while investors simultaneously demand larger risk premiums from lower-quality borrowers. Bond prices can therefore fall well before an issuer actually defaults. During severe periods of credit stress, a CCC-rated bond ETF can experience drawdowns that look much more like an equity portfolio.

There's also a tax consideration behind that 11.94% SEC yield. Corporate bond interest is generally taxed as ordinary income in a taxable brokerage account. For investors in higher marginal tax brackets, the after-tax yield can therefore be substantially lower than the headline figure suggests.

Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. It is essential to seek guidance from a registered financial professional before making any investment decisions.